Correlation Between Home Depot and Mink Therapeutics
Can any of the company-specific risk be diversified away by investing in both Home Depot and Mink Therapeutics at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Home Depot and Mink Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Mink Therapeutics, you can compare the effects of market volatilities on Home Depot and Mink Therapeutics and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Home Depot with a short position of Mink Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Mink Therapeutics.
Diversification Opportunities for Home Depot and Mink Therapeutics
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Home and Mink is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Mink Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mink Therapeutics and Home Depot is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Home Depot are associated (or correlated) with Mink Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mink Therapeutics has no effect on the direction of Home Depot i.e., Home Depot and Mink Therapeutics go up and down completely randomly.
Pair Corralation between Home Depot and Mink Therapeutics
Allowing for the 90-day total investment horizon Home Depot is expected to generate 0.5 times more return on investment than Mink Therapeutics. However, Home Depot is 2.0 times less risky than Mink Therapeutics. It trades about 0.17 of its potential returns per unit of risk. Mink Therapeutics is currently generating about -0.1 per unit of risk. If you would invest 37,185 in Home Depot on August 26, 2024 and sell it today you would earn a total of 4,815 from holding Home Depot or generate 12.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Home Depot vs. Mink Therapeutics
Performance |
| Timeline |
| Home Depot |
| Mink Therapeutics |
Home Depot and Mink Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Mink Therapeutics
The main advantage of trading using opposite Home Depot and Mink Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Mink Therapeutics can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Mink Therapeutics will offset losses from the drop in Mink Therapeutics' long position.| Home Depot vs. Arhaus Inc | Home Depot vs. Haverty Furniture Companies | Home Depot vs. Kirklands | Home Depot vs. Haverty Furniture Companies |
| Mink Therapeutics vs. Affimed NV | Mink Therapeutics vs. Adaptimmune Therapeutics Plc | Mink Therapeutics vs. Sangamo Therapeutics | Mink Therapeutics vs. Day One Biopharmaceuticals |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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